By Phil Lewis. Vice President, Solution Consulting EMEA at Infor.
As manufacturers strive to be on the front line of innovation, they must stop, look, listen and plan their strategy for being the Digital Enterprise of the future. It doesn't happen overnight, but if manufacturers haven't started thinking beyond on-premise ERP confined to their own four walls, and examined concepts such as the Internet of Things, Big Data, Mobility and Cloud deployment, they run a risk of soon becoming obsolete.
Defining digital enterprises and the disruption
Digital enterprises are defined by the interconnected, advanced IT solutions which allow manufacturers to use data to be highly strategic, proactive, customer-centric and profitable. Typically, several interoperable solutions are involved, and they are often cloud-based. While many manufacturers have adopted next generation solutions and started to reap the benefits, many analysts believe this disruptive advance in manufacturing is in its infancy. Businesses have only just begun to fathom the potential and engage.
Most analysts agree the full scale disruption is coming; it is only a matter of timing and scope. In a recently published paper, Deloitte commented, "In today's highly connected world, digital strategy is business strategy. It's developing new digital capabilities and integrating them across the organisation."
Elsewhere, Accenture cites a recent survey which examines how businesses, including manufacturers, view this impact. The report states that 81 percent of respondents agree "in the future, industry boundaries will dramatically blur as platforms reshape industries into interconnected ecosystems. Huge efficiencies can and will be gained as businesses continue to master digital technologies internally."
One element ties all of the definitions and views together: data. The growing influence of meaningful data is the driving force behind this paradigm shift to modern manufacturing and the factory of the future.
Digital Enterprise Stepping Stones
Becoming a Digital Enterprise by 2020 requires advanced planning. It is no simple task, nor is there an "off-the-shelf" product in a box that will suddenly transform a manufacturer into a high performing Digital Enterprise. It is a process, one that often involves multiple phases, outside expertise, investments, and top-level commitment. Without C-level support and backing, which includes a budget, any such plan is doomed to fail. Following this buy in and commitment, there are then common stepping-stones to reaching the status of Digital Enterprise:
1. Prioritise goals and set strategy
Any business undergoing change MUST know what the business wants to achieve and why.
- Be specific with objectives to measure progress toward them.
- Set realistic goals. Don't over inflate benefits or ignore possible challenges.
- Keep customer satisfaction as a central part of this strategy.
- Include in the strategy definitions of success and how you will measure progress.
- Prioritise and choose goals so the business can achieve early wins in order to build support.
2. Create teams, exploit expertise
Digital transformation success demands clearly defined roles of team members and expectations. This can't be a low-priority project that gets intermittent commitment.
- Establish a cross-functional team with representatives from every department involved.
- Establish one definitive leader with decision-making capabilities.
- Invest in team building and empowering internal personnel to conduct research and become expects of specific subjects or tasks, such data analysis, configuration tools, or quality control systems.
- Break roles into manageable segments, being careful to not overload one team member or department.
- Involve skeptics as well as enthusiasts. Differing perspective can help bring a balanced panoramic view to the project.
- Turn to industry experts, consultants and product vendors to assist with highly specialised areas. Don't reinvent the wheel.
3. Optimise market opportunities
Successfully transforming manufacturers must develop an in-depth understanding of the target market, including buyer profiles, buying triggers, and the buying decision process.
- Explore new markets, regions, demographics, and vertical niches.
- In addition to considering expanding, also consider contracting — or specialising on a vertical industry or niche market in order to focus resources.
- Select initiatives that support efforts to reinforce current market positions as well as capture new opportunities. Be opportunistic, while keeping a strategic perspective and grasp of realistic expectations.
- Pursue the opportunities where a business can create product differentiation and offer unique value propositions.
4. Implement, while controlling risk
Successful companies often use a phased approach to deployment of major initiatives, such as becoming a Digital Enterprise. A phased implementation approach provides early wins and chances to refine strategies over time.
- Start with foundational concepts then build from there.
- Get the basics right before moving to more advanced strategies. For example, when deploying a process to automate reaction to sensors, a business must first make sure it can collect and contextualise the data — before the business can begin on automating response to the data.
- Start with technologies which will be used across multiple applications. For example Business Intelligence is used in nearly every application of a Digital Enterprise.
- Consider strong analytics and reporting tools as the prerequisites for moving on to more applications of data.
- Monitor for quality and security issues. As with any new initiative, integrity of data, quality, and security must be considered. Involve experts to minimise risk.
5. Evaluate and refine
Perfection is seldom achieved on the first attempt. Continuous improvement is an important concept that remains critical in manufacturing.
- Evaluate progress at predetermined milestones, making course corrections as needed.
- Keep the whole organisation informed on progress. Celebrate achievement and accept suggestions for improvements.
- Don't set the goals too low. As expertise improves, so should expectations.
- Measure new revenue or gains versus investment to calculate return. ROI can be less tangible characteristic, such as customer loyalty, recognised leadership, or positioning as the expert company in the field.
These five steps are merely highlights of a path to becoming a Digital Enterprise. Each specific industry within manufacturing will undoubtedly have variations and specific must-do steps which need to be introduced, such as any industry mandates, testing or compliance issues to manage.
Each company will find its own cadence of "plan, research, enact, evaluate" that makes sense for their organisation and stakeholder expectations. One size does not fit all, nor can a cookie cutter format for modernisation be prescribed and expected to be followed precisely. But, based on a thorough evaluation of the data, strategy and opportunity behind digital transformation, it is clear that there is a lot more beyond ERP.